Qualifying for a Doctor Loan: Medical School Loan Deferment
(Waiving medical school loans from your qualifying debt to income ratio when qualifying for a Doctor Mortgage)
This topic of discussion often comes up because many physician lenders simply advertise “medical school loans not counted in debt ratios”. Once you contact the lender you will realize that this is not by default, all that they require.
Yes, Medical student loans in deferment can often be waived when getting qualified for a doctor loan. The thing to note however, is that you must be able to provide documentation that your medical student loan will remain in deferment for at least a 12 months after your new mortgage loan closes. This isn’t always the case with every lender however this is a common requirement.
For students graduating medical school and going into residency, many lenders will automatically waive your student loans from your overall debt ratio since residency usually allows for a continuation of your loan deferment.
Qualifying for a Doctor Loan: How some Doctor Lenders view Income Based Repayment (IBR)
Much like a student loan in deferment, lenders will allow you to qualify for a doctor mortgage loan using your lower monthly payment obligation negotiated through Income Based Repayment (IBR). Often a lender will want to know that the current payment you have will continue for at least 12 months after your new mortgage loan closes.
Note: The tricky thing about IBR when trying to use it for qualifying for a mortgage: It is my understanding that IBR can only be negotiated only once a year. Often you have one opportunity per year to renegotiate IBR for another 12 month period. This makes getting the timing just right when trying to get a lender to use this lower monthly payment very difficult. Chances are by the time you close on your new house you might only have 8 or 9 months on your IBR depending on what time of year you apply for your mortgage loan. Consider having the lender calculate your full monthly payment as if it were in regular repayment status. Otherwise find a lender who does not require your current IBR payment to continue for the next 12 mo after loan closes.
Discussion: Because these rules can vary from bank to bank, does anyone have any experience with qualifying for a doctor loan with deferred medical school loans or IBR?
Did you run into any problems with a specific lender?
Please contribute to the discussion and comment below!